US Federal Court Rules Cryptocurrencies as Commodities

Oct 05, 2018 at 21:54

A Massachusetts federal court has denied the appeal of now defunct My Big Coin to dismiss the fraud case filed by the Commodity Futures Trading Commission (CFTC) against its platform.

The announcement was made in a recent statement where the CFTC Director of Enforcement James McDonald said the ruling is “important” in cementing the regulator’s authority to probe into virtual currency markets and and halt the operations of those found to be fraudsters.

“We will continue to police these markets in close coordination with our sister agencies,” McDonald said.

The ruling was likened to the CFTC’s case against McDonnell in the Eastern District of New York.

The decision also recognized the broad definition of commodity under the Commodity Exchange Act which covered virtual currencies.

The court ruled the term “commodity” “includes a host of specifically enumerated agricultural products as well as ‘all other goods and articles . . . and all services rights and interests . . . in which contracts for future delivery are presently or in the future dealt in.”

The court specifically agreed with the CFTC that “Congress’ approach to defining ‘commodity’ signals an intent that courts focus on categories—not specific items.”

This broadens the earlier decision of the US Securities and Exchange Commission which cited only Bitcoin and Ethereum as having commodity-like traits.

The Court found that ‘[t]his broad approach also accords with Congress’s goal of ‘strengthening the federal regulation of the . . . commodity futures trading industry,’ . . . since an expansive definition of ‘commodity’ reasonably assures that the CEA’s regulatory scheme and enforcement provisions will comprehensively protect and police the markets.”